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signification by the drawee of his assent to the order of the drawer." In the same section are given the essentials of a valid acceptance. Section 18 specifies the time for acceptance, and section 54 the liability of the acceptor. As between the parties liable on a bill, the drawee who accepts for value becomes the principal debtor, and the drawer and indorsers become, as regards him, sureties.

An acceptance is either

(a) General, which assents without any qualification to the order of the drawer, or

(b) Qualified, which in express terms varies the effect of the bill as drawn. In particular, an acceptance is qualified which is : (i) Conditional, i.e., makes payment by the acceptor dependent on the fulfilment of a condition therein stated. An acceptance "Payable on delivery of Bills of Lading would be conditional.

(ii) Partial, i.e., an acceptance to pay part only of the amount for which the bill is drawn.

(iii) Local, i.e., an acceptance to pay only at a specified place. But such an acceptance is deemed general unless it expressly states that the bill is to be paid there only and not elsewhere, e.g. “Payable at Lloyds Bank, Rhyl, and there only."

(iv) Qualified as to time, e.g., drawn at one month and accepted at three months.

(v) The acceptance of some one or more of the drawees but not of all.

Wherever possible an acceptance will be construed as general and not as qualified.

The holder of a bill may refuse to take a qualified acceptance, and if he does not obtain an unqualified acceptance he may treat the bill as dishonoured by non-acceptance.

The acceptor may be either an ordinary acceptor, i.e., one who owes money to the drawer, or an accommodation acceptor, i.e., one who accepts for the convenience of the drawer without receiving consideration. Such an acceptor is liable on the bill to a holder for value, and it is immaterial whether when such holder took the bill he knew the acceptor to be an accommodation acceptor or not; but the acceptor can claim to be indemnified by the drawer.

Acceptance, and in fact every other contract on a bill, is incomplete and revocable until delivery of the instrument in order to give effect to it.

Sections 39 and 40 of the Act specify when presentment for acceptance is necessary, and the time of presentment.

As a matter of business, it is advisable that a bill should be presented for acceptance as soon as possible, for, if acceptance is refused, the parties to the bill, other than the drawee, become immediately liable, even though the bill has not yet matured. The wrongful omission of an agent to present a bill, would render him liable to his principal for any loss resulting.

The Act lays down in section 41 many rules as to presentment for acceptance and excuses for non-presentment. The fact that the holder has reason to believe that the bill, on presentment, will be dishonoured does not excuse presentment.

Reasonable diligence must be used to find the drawee, or some person authorized to act for him. Putting a bill in a bill-box, or handing it to a clerk in the office in the usual way, is a valid presentment to the drawee. If, however, the drawee is not a trader, presentment to a servant at the door is not sufficient.

Acceptance for Honour.

Ordinarily, only the person to whom a bill is addressed can accept it; but there is an exception where a bill has been protested for dishonour by non-acceptance, or protested for better security, and is not overdue. Then any person, not being a party already liable thereon, may, with the consent of the holder, intervene and accept the bill suprà protest, for the honour of any party liable thereon, or for the honour of the person for whose account the bill is drawn. A bill is non-accepted where the person to whom it is addressed cannot be found, or by reason of infancy or other causes cannot accept, or refuses to accept. A holder obtains an acceptance " for better security when he endeavours to protect his interests by obtaining an acceptance for honour in cases where the acceptor has become bankrupt or insolvent, or suspends payment before the bill


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Such an acceptance, which is rarely met with, is termed an acceptance for honour suprà protest" and the acceptor is called an acceptor for honour." Where an acceptance for honour does not expressly state for whose honour it is made, it is deemed to be an acceptance for the honour of the drawer. In order to be valid, such an acceptance must

(a) be written on the bill and indicate that it is an acceptance for honour;

(b) be signed by the acceptor for honour.

A bill may be accepted for honour for part only of the sum for which it is drawn. The liability of an acceptor for honour is not absolute, but accrues only if the bill is not paid by the

drawee, and then only if it has been duly presented for payment and, on dishonour, has been protested for non-payment, and the acceptor for honour receives due notice of these facts. The acceptor for honour is liable to the holder and to all parties to the bill subsequent to the party for whose honour he has accepted. The drawer of a bill or any indorser may insert therein the name of a person to whom the holder may resort in case of need, that is to say, in case the bill is dishonoured by non-acceptance or non-payment. Such person is called the "referee in case of need." It is in the option of the holder to resort to the referee in case of need or not as he may think fit.


A bill may be payable either to order or to bearer. As before mentioned, a bill may contain words prohibiting transfer, or indicating an intention that it should not be transferable, in which case, although it is valid as between the parties, it is not negotiable. The Act says that a bill is negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder of the bill. A bill payable to bearer is negotiated by delivery and no indorsement is necessary; but indorsement is desirable so as to make the transferor liable as a party to the bill in case it is dishonoured. If he does not indorse it he simply warrants to his immediate transferee, being a holder for value, that the bill is what it purports to be, that he has a right to transfer it, and that at the time of transfer he is not aware of any fact which renders it valueless.

Where the transferor indorses the bill he becomes an indorser and is liable in accordance with the provisions of section 55 (2) of the Act.

A bill payable to order is negotiated by the indorsement of the holder completed by delivery. Where the holder of a bill payable to his order transfers it for value without indorsing it, the transfer gives the transferee such title as the transferor had in the bill, and the transferee, in addition, acquires the right to have the indorsement of the transferor. Where any person is under an obligation to indorse a bill, he may indorse it in such terms as to negative or to limit his personal liability.

The first step in negotiation is when the bill is handed by the drawer to the payee. This is generally before acceptance, but may be after acceptance has been obtained. He then becomes a “holder in due course," if he conforms with the provisions in section 29 (1) of the Act.

Conditions as to Indorsements.-To be valid, and to operate as a negotiation, an indorsement must comply with the conditions laid down in section 32 of the Act. These should be carefully

studied, as also should the three following sections of the Act which deal with the various types of indorsement.

In the event of there not being sufficient room on a bill for all the indorsements, a slip of paper called an "allonge is attached to the bill. The first indorsement on an allonge should be written partly on the bill and partly on the allonge, so as to avoid the possibility of fraud.

An indorsement in blank is where the indorser simply signs his name. The effect of this is that the bill becomes payable to bearer, and is at once transferable by mere delivery even though originally it was payable to order. Any holder of a bill with a blank indorsement may convert the blank indorsement into a special indorsement by writing above the indorser's signature a direction to pay the bill to, or to the order of, himself or some other person. A special indorsement, in addition to the signature of the endorser, specifies the payee, as " Pay to A.B. and Co. or order." If A.B. and Co. desire further to negotiate the bill, they must indorse it. A restrictive indorsement may be a mere authority to deal with the bill as directed, and not a transfer of the ownership, or the indorsement may prohibit the further negotiation of the bill, as "Pay A.B. only or "Pay C.D. or order for collection." Such an indorsement gives the indorsee the right to receive payment of the bill, and to sue any party thereto that his indorser could have sued, but gives him no power to transfer his rights as indorsee unless it expressly authorizes him to do so. Where the restrictive indorsement authorizes further transfer, all subsequent indorsees take the bill with the same rights and subject to the same liabilities as the first indorsee under the restrictive indorsement.

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A conditional indorsement is one in which payment is made subject to the fulfilment of a condition. The condition may, however, be disregarded by the payer, and payment to the indorsee is valid whether the condition has been fulfilled or not. Presumably the condition is operative between indorser and indorsee, and if the latter received payment without the condition being fulfilled, he would hold the money in trust for the indorser. An example of such an indorsement would be "Pay A. B. or order on his leaving for London," or "Pay A. B. or order on his marriage to M."

Ordinarily, every prior indorser may be called upon to pay the amount of the bill by a subsequent indorser, who has been compelled to pay the bill on account of the failure of the acceptor to meet it, and, in the same way, the first indorser may fall back upon the drawer. The rule is that indorsements are presumed to have been made in the order in which they appear on the bill, but the whole circumstances attendant on the transaction

may be considered in order to ascertain the true relation to one another of the parties. Thus, in Macdonald v. Whitfield (1883), three directors of a company mutually agreed with one another to become sureties for the debt of the company and indorsed a note accordingly. It was decided that the first of the three indorsers need not indemnify the others, but that all three were liable to equal contribution. An indorser may so indorse a bill as to be under no liability on it, by putting after his name the words sans recours (without recourse to me) or words to the like effect -but, of course, the indorsee may refuse to take such an indorsement.

Where a bill is negotiable in its origin, it continues to be negotiable until it has been (a) restrictively indorsed or (b) discharged by payment or otherwise. An overdue bill can be negotiated only subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which the person from whom he took it had.

Circuity of action.-If a bill is negotiated back to the drawer, or to a prior indorser, or to the acceptor, such party may, subject to the provisions of sections 59 (3) and 60 of the Act, re-issue and further negotiate the bill, but he is not entitled to enforce payment of the bill against any intervening party to whom he was previously liable, as they have a corresponding right against him. Such a condition of affairs is known as "circuity of action," and may be illustrated as follows: A indorses a bill for value to B, who negotiates the bill and eventually it is indorsed back to A. In the event of A, in his second capacity as indorser, having to pay the bill, he cannot sue B as a prior indorser, for B in turn could sue A on the latter's first endorsement.

Consideration for a Bill of Exchange.

The words "for value received" are usually inserted in a bill of exchange, but they are not necessary, as value is presumed until the contrary is shown. Herein a bill of exchange differs from an ordinary simple contract. There is also another point of difference; in a simple contract the consideration must not, as a rule, consist of a past benefit, but consideration in the case of a bill of exchange may consist of any consideration sufficient to support a simple contract, or of any antecedent debt or liability. If value has at any time been given for a bill, the holder is deemed to be a holder for value as regards the acceptor and all parties to the bill who became parties prior to such time. So that it is no defence for any such party to plead that he received no consideration for it, although the holder who did not give value cannot maintain an action against his immediate transferor.

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